At €10.46, Is It Time To Put Fomento de Construcciones y Contratas, S.A. (BME:FCC) On Your Watch List?

Fomento de Construcciones y Contratas, S.A. (BME:FCC), which is in the construction business, and is based in Spain, saw significant share price movement during recent months on the BME, rising to highs of €12.26 and falling to the lows of €10.44. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Fomento de Construcciones y Contratas’s current trading price of €10.46 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Fomento de Construcciones y Contratas’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

View our latest analysis for Fomento de Construcciones y Contratas

What’s the opportunity in Fomento de Construcciones y Contratas?

According to my valuation model, Fomento de Construcciones y Contratas seems to be fairly priced at around 1.2% below my intrinsic value, which means if you buy Fomento de Construcciones y Contratas today, you’d be paying a reasonable price for it. And if you believe the company’s true value is €10.59, then there isn’t much room for the share price grow beyond what it’s currently trading. In addition to this, Fomento de Construcciones y Contratas has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from Fomento de Construcciones y Contratas?

BME:FCC Past and Future Earnings, October 3rd 2019
BME:FCC Past and Future Earnings, October 3rd 2019

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 67% over the next couple of years, the future seems bright for Fomento de Construcciones y Contratas. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has already priced in FCC’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on FCC, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

Price is just the tip of the iceberg. Dig deeper into what truly matters – the fundamentals – before you make a decision on Fomento de Construcciones y Contratas. You can find everything you need to know about Fomento de Construcciones y Contratas in the latest infographic research report. If you are no longer interested in Fomento de Construcciones y Contratas, you can use our free platform to see my list of over 50 other stocks with a high growth potential.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.